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Kenyans borrowed Sh9.67 billion weekly via Safaricom’s overdraft service Fuliza in the year ended March as an additional one million customers joined.
Safaricom disclosed yesterday that the value of disbursements via the service hit Sh502.6 billion in the financial year ended March 2022, up from Sh351.2 billion that had been disbursed in the previous financial year.
The latest overdrafts translate to Sh9.7 billion weekly borrowing between April last year and March this year—a 43.1 per cent rise when compared to Sh6.75 in the preceding similar period of 2020/2021. The review period saw an additional one million customers join the service to send the total number of daily active Fuliza users to 6.9 million.
The telco says the average ticket size is now Sh345.2. But the borrowing per individual could be higher since customers are allowed to take several overdrafts before repaying, subject to the approved overdraw limit.
A rise in small short term borrowings — mainly used to meet essential needs such as food and rent—signals the deepened debt dependence as rising cost of living batters Kenyans. KCB M-Pesa and Mshwari—which are the other Safaricom-linked mobile loan products— posted declines in value of loans as Fuliza continued to muscle them out.
The value of KCB M-Pesa loans fell by 9.4 per cent to Sh46.3 billion despite users growing by 500,000 to hit 3.8 million. Mshwari loans dipped by 8.9 per cent to Sh86.1 billion even as users rose by 700,000. The average loans on KCB M-Pesa dropped 21.2 per cent to Sh6,874 while that on Mshwari grew 10.7 per cent to Sh 6,172.
Safaricom earned Sh8.54 billion as revenue from the three products with that of Fuliza being Sh5.94 billion—a 31 per cent jump. The telco introduced Fuliza service in 2019 and has become popular among Kenyans in meeting essential needs such as shopping, rent, and supporting friends and family when there is no sufficient money in their M-Pesa wallets.
Safaricom charges Fuliza customers a one-off 1.083 per cent interest and a daily administrative fee that depends on the outstanding balance. The Fuliza fee starts from Sh2 per day for a Sh100 overdraft and goes up to Sh30 per day for Sh2,500 and above. Customers who do not clear Fuliza overdraft within 30 days are barred from utilising their unused Fuliza limit until they settle the outstanding amount.
The default rate for Fuliza overdraft is usually very low since the debt is settled instantly when the customer’s M-Pesa wallet receives money. The three products are enjoying growing popularity among Kenyans because of the ease of accessing the money as compared to the traditional bank loans or Shylock services.
Other mobile-based loans products such as Silicon Valley–backed Tala and Branch, as well as Zenka, Opesa and Okash have popped up, offering short-term loans via lending apps.